Individuals are liable to tax on the basis of personal affiliation if they have their domicile or residence for tax purposes in Switzerland. A person is domiciled in Switzerland for tax purposes if he or she resides here with the intention of remaining permanently or if federal law assigns him or her a special legal domicile here. The tax liability is unlimited with the exception of foreign business operations, permanent establishments and real estate.
In case there is no tax residence on the basis of personal affiliation in Switzerland, the income tax liability is limited to the domestic income.
The following are subject to income tax:
1. Income from employment,
2. Income from self-employment,
3. Movable assets,
4. Immovable assets,
5. Income from pension provision,
6. Other income
which the taxpayer earns during his unlimited income tax liability or as domestic income during his limited income tax liability.
The capital gains from the sale of private assets are tax-free.
In Germany, there are two main types of withholding taxes, capital gains tax and payroll tax.
Wage tax is levied by the domestic employer by deduction from wages. The employee receives a wage tax certificate (Lohnausweis) from the employer for the calendar year.
Capital gains tax is levied on domestic investment income as a withholding tax (Verrechnungssteuer).
Tax Rates for Switzerland
Taxation begins at SFR 14,500 (single individuals). For married couples, the filing threshold for joint returns increases to SFR 28,300.
|0.77% -13.2% progressive rate||SFR 14,500 – SFR 755,200|
|11.5%||SFR 755,200 & more|
Capital gains tax is payable on income from financial investments, e.g. bank deposits, shares, bonds, funds, ETFs or certificates. As a rule, this is a flat rate of 25% + solidarity surcharge + church tax, if applicable.
The 26 cantons and the approximately 2500 municipalities in Switzerland also levy income tax. The top tax rates for the total tax burden of single individuals at the federal, cantonal and municipal levels range from around 22% to 46%.
Income Tax Schedule
Income tax is an annual tax. The basis for its assessment is determined for each calendar year.
The deadline for filing the income tax return prepared by the taxpayer himself/herself is based on cantonal regulations. In most cantons, the deadline is March 31 of the following year. Deadline extensions are possible.
Payments must be made no later than 30 days after the due date.. Interest is assessed for late payments.
Swiss Social Security System
The three-pillar principle underlying the Swiss old-age, survivors’ and disability pension system is laid down in the constitution.
The federal old-age, survivors’ and disability insurance (AHV/IV), which, together with supplementary benefits, is intended to ensure adequate coverage of subsistence needs.
The occupational pension plan (bV), with which the continuation of the accustomed standard of living is to be made possible in an appropriate manner.
The self-provision, divided into a tied, tax-privileged self-provision and a voluntary self-provision. These are individual savings.
Only AHV/IV and health insurance are mandatory for the entire resident population of Switzerland. In other social insurances, at least employees are compulsorily insured (bV, accident insurance and unemployment insurance). Other social insurances only cover persons if they perform a certain activity or have a certain characteristic.